US designates Hizballah money exchanger

FP Report

WASHINGTON DC: The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) designated five individuals for helping U.S.-designated Hizballah money exchanger Hassan Moukalled (Moukalled) and his company, CTEX Exchange, evade sanctions and facilitate illicit activities in support of Hizballah. These individuals, including two co-founders of CTEX Exchange and two of Moukalled’s sons, operate two companies in Lebanon and the United Arab Emirates (UAE) that are being concurrently designated. Individuals and entities targeted today are being designated pursuant to Executive Order (E.O.) 13224, as amended, which targets terrorist groups, their supporters, and those who aid acts of terrorism.

“Hizballah continues to rely on seemingly legitimate business investments and key facilitators to generate revenue for the group’s operations, including its destabilizing attacks across Israel’s northern border,” said Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian E. Nelson. “The United States remains focused on relentlessly pursuing Hizballah’s key revenue sources and constraining its ability to further destabilize the region.”

This action builds on OFAC’s January 24, 2023 designations of Moukalled, his companies CTEX Exchange, Lebanese Company for Information and Studies SARL (LCIS), and Lebanese Company for Publishing, Media, and Research, as well as Rayyan Hassan Moukalled (Rayyan Moukalled) and Rani Hassan Moukalled (Rani Moukalled) pursuant to E.O. 13224, as amended. The UAE added the same three individuals and CTEX Exchange to their Local Terrorist List in February 2023.

Moukalled continues to serve as a financial advisor to Hizballah and works closely with senior Hizballah finance officials, including U.S.-designated Muhammad Qasir, to represent Hizballah’s business interests throughout the Middle East. Moukalled, jointly with Hizballah senior officials Muhammad Qasir and Muhammad Qasim al-Bazzal, established CTEX Exchange as a financial facilitation front company for Hizballah. OFAC designated Muhammad Qasir and Muhammad Qasim al-Bazzal pursuant to E.O. 13224 for acting for or on behalf of Hizballah on May 15, 2018 and November 20, 2018, respectively.

HIZBALLAH ADVISOR MOUKALLED’S SANCTIONS EVASION NETWORK
Adnan Mahmoud Youssef (Youssef) is an employee of CTEX Exchange and has, as of mid-2023, sought investors to set up companies in the UAE on behalf of Moukalled in circumvention of the sanctions imposed on Moukalled in early 2023 by the government of the UAE. Youssef has been involved in business dealings, including discussions of proposals and profitability, with Rayyan Moukalled and Rani Moukalled. Additionally, Youssef has engaged in business transactions with and received over a million dollars from U.S.-designated Hizballah financier Mohammad Ibrahim Bazzi.

Mazen Hassan al-Zein (al-Zein) is a UAE-based business consultant for Moukalled. As recently as mid-2023, al-Zein has been a business partner with Moukalled and Youssef on various projects in the UAE. Al-Zein also had management role in a parent company that would administer a number of businesses the three men planned to establish in the UAE on Moukalled’s behalf following Moukalled’s designation. Moukalled appointed al-Zein as his representative to coordinate with Moukalled’s associates on his behalf, particularly on business deals with potential investors to secure millions of dollars’ worth of funds.

Al-Zein is the Chief Executive Officer (CEO) and founder of The Crystal Group, a Lebanon and UAE-based hospitality company.

Youssef and al-Zein are being designated for having acted or purported to act for or on behalf of, directly or indirectly, Moukalled, a person whose property and interests in property are blocked pursuant to E.O. 13224, as amended. The Crystal Group is being designated for being owned, controlled, or directed by, directly or indirectly, al-Zein, a person whose property and interests in property are blocked pursuant to E.O. 13224, as amended.

Andriyah Samir Mushantaf (Mushantaf) and Bashir Ibrahim Mansur (Mansur), jointly with Moukallad, contributed capital towards founding CTEX Exchange. Mushantaf and Mansur continue to be minority shareholders in CTEX Exchange alongside Moukalled.

Mushantaf and Mansur are being designated pursuant to E.O. 13224, as amended, for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, CTEX Exchange, a person whose property and interests in property are blocked pursuant to E.O. 13224, as amended.

Moukalled often involves his family members in illicit activities for Hizballah, including his previously designated children, Rayyan and Rani. Firas Hasan Moukalled (Firas), Moukalled’s son, is also involved in Moukalled’s business dealings through U.S.-designated LCIS, where Firas works. Lebanon-based Teleport Company SAL (Teleport) is jointly owned and operated by Mushantaf and two of Moukalled’s sons, Firas and Rayyan.

Firas is being designated pursuant to E.O. 13224, as amended, for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, Moukalled, a person whose property and interests in property are blocked pursuant to E.O. 13224, as amended. Teleport is being designated pursuant to E.O. 13224, as amended, for being owned, controlled, or directed by, directly or indirectly, Mushantaf, Firas, and Rayyan, persons whose property and interests in property are blocked pursuant to E.O. 13224, as amended.

SANCTIONS IMPLICATIONS
As a result of today’s action, all property and interests in property of the designated persons described above that are in the United States or in the possession or control of U.S. persons are blocked and must be reported to OFAC. In addition, any entities that are owned, directly or indirectly, individually or in the aggregate, 50 percent or more by one or more blocked persons are also blocked. Unless authorized by a general or specific license issued by OFAC, or exempt, OFAC’s regulations generally prohibit all transactions by U.S. persons or within (or transiting) the United States that involve any property or interests in property of designated or otherwise blocked persons.

Furthermore, engaging in certain transactions with persons designated today entails risk of secondary sanctions pursuant to E.O. 13224, as amended. Individuals and entities being designated today are also subject to the Hizballah Financial Sanctions Regulations, which implements the Hizballah International Financing Prevention Act of 2015, as amended by the Hizballah International Financing Prevention Amendments Act of 2018. Pursuant to these authorities, OFAC can prohibit or impose strict conditions on the opening or maintaining in the United States of a correspondent account or a payable-through account of a foreign financial institution that knowingly conducted or facilitated any significant transaction on behalf of a Specially Designated Global Terrorist, or, among other things, knowingly facilitates a significant transaction for Hizballah or certain persons designated for their connection to Hizballah.

In addition, non-U.S. financial institutions and other persons that engage in certain transactions or activities with sanctioned entities and individuals may expose themselves to sanctions risk or be subject to an enforcement action. The prohibitions include the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any designated person, or the receipt of any contribution or provision of funds, goods, or services from any such person.

The power and integrity of OFAC sanctions derive not only from OFAC’s ability to designate and add persons to the SDN List, but also from its willingness to remove persons from the SDN List consistent with the law. The ultimate goal of sanctions is not to punish, but to bring about a positive change in behavior.